The consumer price index rose 0.2 percent in August, above a 0.1 percent rate forecast by the market and reported for July, government data showed on Thursday.
A majority of analysts expect the Chilean central bank to hold its benchmark interest rate at 5.25 percent for a third month running next week as inflation pressures ease and economic growth moderates, a Reuters poll showed last week.
"The scenario isn't radically changed because inflation came out at 0.2 percent," said Matias Madrid, chief economist at Banco Penta in Santiago. "I think it's quite unlikely that they lower rates" at the bank's Sept. 15 rate-setting meeting, he said, though a worsening global economic outlook could prompt a cut as soon as October.
Chile's central bank on Wednesday signaled it would hold interest rates steady in the near term, narrowed its economic growth range and chopped its 2011 inflation outlook.
"A few months ago we thought the most likely is that we'd keep up the rate hikes," said central bank president Jose De Gregorio at a business forum on Thursday morning. "Today ... a hold is the most probable (scenario) in the coming months."
The bank sees 2011 inflation at 3.3 percent, down from a previous view of 4.0 percent forecast in June, within the bank's 2.0 to 4.0 percent annual tolerance range, and sees inflation holding around its 3 percent target.
Government statistics department INE on Thursday showed inflation in the 12 months to August was 3.2 percent, close to the central bank's annual inflation target. That compares to 2.9 percent in the 12 months to July.
The Chilean peso was trading slightly stronger on Thursday morning, tracking gains in global stocks despite weaker prices for top export copper and light dollar gains against a basket of currencies.
Core CPI, which strips out prices for fuel, fresh fruit and vegetables, also rose 0.2 percent in August after rising 0.2 percent in July, government data showed.
Food and nonalcoholic drinks, clothing, footwear and health costs drove the month's price increases, the government said.
Chile's central bank held its benchmark interest rate steady in August for a second straight month as inflation expectations ease and on concerns about global economic growth, boosting bets it has ended its rate hike cycle early.
Traders polled by Chile's central bank expect it to hold its key rate steady in the near term and to cut it to 5 percent by March.
Latin America's central banks are seen having ended steep rises in borrowing costs as the global economic outlook darkens and some are starting to mull interest rate cuts instead.
Brazil's central bank surprised markets by slashing its key interest rate to 12 percent from 12.5 percent last month, and outlined in its statement the risks of a gloomier global outlook worsening a slowdown in Brazil's economy.
Copyright Reuters, 2011